By DailyFX - US Non Farm Payrolls printed at -35K versus consensus expectations of -150K as
Katrina's effect was far less destructive than initially feared. The...

... true extent of
the damage, however, may not be known until next month when the Labor Department
will make adjustments to this preliminary reading. Meanwhile, last months numbers
showed a material upward adjustment from 169K originally reported to the final
figure if 211K. Overall the data confirms the dollar bulls argument that the US
economy is fundamentally sound and will absorb the impact of both Katrina and Rita
hurricanes with relative ease. The EUR/USD dropped about 40 points in the aftermath
of the release but recovered some of the loss, reflecting the market's uncertainty
about the veracity of the figures.

In the last two days the dollar lost ground across all the majors, falling nearly
200 points against the euro and 300 points against sterling. Although the NFP data
by itself may not spur strong dollar buying, as we reported earlier this morning
"our proprietary Sentiment Speculator Index has flashed severely overbought levels
in GBP/USD with 3.5 cable bulls for every dollar bull and in the USD/JPY where there
are now 3 dollars shorts for every yen short. We haven't seen such skewed
positioning in several months which suggests that the dollar could rally once
again."




Boris Schlossberg
Senior Currency Strategist
Forex Capital Markets LLC
Financial Square
32 Old Slip, 10th Floor
New York, New York 10005
Tel (212) 897-7660
Fax (212) 897-7669
bschlossberg@fxcm.com

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